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Stocks News: Lehman Brothers Bankrupt, Merrill Lynch and AIG losses 16th September 2008

Be prepared for the strong possibility of more selldowns in the weeks and months ahead. The US financial sector and therest of the economy could take a couple of years to clean up and consolidate.
Unemployment will go up, housing prices continue to drop, more mortgage loans will be foreclosed, domestic consumption may shrink and economic growth in the US could go to zero or turn negative for at least several quarters.
During the Asian Financial Crisis, the STI crashed from above 2,000 points in July 1997 to a bottom of about 800 by September 1998. It recovered strongly from November 1998 and throughout the whole of 1999 and hit a new record high of about 2600 on the first trading day of the year 2000. The recovery of the STI after hitting its low in the Asian FinancialCrisis was truly spectacular.
Lehman Brothers file for the biggest bankruptcy in history and Bank of America buy Merrill Lynch in a $50 billion deal.The Dow Jones industrial average (INDU) lost 290 points.The Standard & Poor’s 500 (SPX) index lost 1.3% and the Nasdaq composite (COMP) lost 2.5%.
Bank of America also announced early Monday that it will acquire Merrill Lynch (MER, Fortune 500) for $50 billion in stock. with net losses of more than $17 billion over the lastfour quarters.
AIG (owns part of AIA) big sell-off and announces a restructuring plan that will include selling off part of its business to raise desperately needed cash and boost investors’confidence. The subprime mortgage crisis has caused AIG to lose more than $18 billion in the past nine months, and it could face a credit downgrade unless the firm is able to raise money. Over the past three quarters, AIG has recognized some $25 billion in writedowns tied to the firm’s promises to guarantee the mortgagebacked debt issued by others. But if the firms made bad bets on mortgage-related securities .
Bear Stearns was acquired by JPMorgan Chase . Freddie Mac and Fannie Mae collapsed followed by Lehman Brothers and Merill Lynch. AIG suffered huge losses. What’s next? The finacial market is going to brave through a long storm
Sources from CNNMoney.com